Business Description: Apple Inc - Case Study Example

Company Research Assignment Name: Instructor: Institution: Date: Business Description: Apple Inc. For the purpose of this report, Apple Inc. was selected as the company to research about due to its global scale operation and its relevancy and applicability to the assignment requirements. Apple Inc. Corporation is an American based multinational company that manufactures cell phones, computer software, consumer electronic goods and personal computers. The firm was established in April 1976 by Steve Jobs supported by Steve Wozniak and is headquartered in Cupertino, California. Initially the firm was known as Apple Computer Inc. until 2007 when it was renamed Apple Inc (Linzmayer, 1999). As at August 2011, Apple Inc. had approximately 300 retail stores in major states of the world which were actively involved in the sale of Apple software and mobile phone product products. Today Apple Company is one of leading firms in the United States producing nearly a fifth of the nation’s total annual export (Harms, & Johnson, 2000). Products and Services Provided by Apple Inc. Apple Inc. started as a trading firm back then when it was started and is involved in the manufacture and selling of electronics, computers and a range of computer application to consumers across the globe. The company is recognized as the leading digital asset management firm and worldwide smart phone manufacturer and seller. The globally recognized products of Apple Company includes the iPhone, iPod, the iPad and the Macintosh computer product lines. Apple Company represents the only firm that generates and operates both hardware and software. It empowers it consumers with the power and capacity to purchase and share content such as movies, applications and music via their tradable devices (iPad, Mac, iPod and iPhone). The introduction and of iPhone and iPad into their product line increased the company competitive edge in the industry as well as improving the revenue base of the firm. If in 2012, the firm was able to sale approximately 36 million iPhone and 14 million iPads during the first quarter proving a turning point towards the realization of the firm’s revenue targets (Nord, 2001). Specifically, iPad product predicted a promising future due to the massive rate in which the consumers responded once it was introduced into the market. The product was off to surpass the projected sales and the management of Apple had to concentrate and focus on how best they could earn extra revenue from subsequent sales considering the market acceptance attitude towards the product (Linzmayer, 1999). Business Culture of Apple Inc.: Missions and Values Business cultures is defined as the unique structure of values, norms, beliefs way of behaving and so on that describe the manner in which individuals and groups combine to get things done. Culture is theoretical and general concept that is used, to include many aspects of a particular organization. It is always thought to be a successful culture, when the employee's goals are aligned to the goals of the organization. Apple Inc. has good strategy of involving the group members in the decision making and hence it helps the company to reduce the numbers of managers. The firm’s employees are motivated to think non-traditionally, working with integrity for benefit of the company and good for the world. The firm’s culture of working entails the employment of the best minds in the industry based on their skills, creative capabilities and knowledge necessary to maintain the firm’s top-notch excellence in the electronic industry. Considering the level of innovation invested in Apple Company, over the years the founders of the company developed the secrecy culture which has proven worth it as it has helped the company a lot in sustaining their competitiveness over the years. Also, it is from the secrecy culture that the company has significantly reduce the level of proprietary theft of intellectual property and information which remains the most critical asset in the technological-related industry. Thus secrecy culture has buffered the firm against the most destructive issue of corporate espionage and staff poaching. The mission of the company is to remain top in the industry and thus the establishment of the above-mentioned cultures have helped the firm significantly to remain compact and leading in the industry since its establishment (Lewis, 2014). The advantages of the identified culture values and missions pursued by Apple Inc. is that is has significantly helped the firm stand out and stay far ahead in its innovative and competitive aspects. This in return has brought much favor to the business in terms of appeal to consumers and subsequent growth in revenue. However, the organizational culture values of Apple comes along with great challenges in that the atmosphere developed of top secrecy limits rapport among members of staff (Linzmayer, 1999). Management of Apple Inc Until 2011, the founder of the firm; Steve Jobs maintained the top tier in the structure of management of the firm. He represented both the co-founder and the CEO of the global firm. From the 2012, the Board of Director were enshrined with much power. The board consist the CEO of the firm, board chairman and other prominent individual within the corporate circle who maintained considerable share within the equity base of the firm. Below the board of directors lies the top executive. The position is made up of the various managing directors who are responsible for departmental sections within the firm’s structure of working. The senior VPs and CEO are directly answerable to the board of directors. However there exists a point of difference between the senior VPs and the firm CEO in the hierarchy of lists of top executives. The corporation’s management structure is not conventional and also not typical because it emphasizes change and direct social links within the firm. We can therefore conclude that the current dominant position of the company is attributable to the synergistic benefits of its organizational structure and organizational culture. Employee benefits The major benefits employees of Apple Inc. enjoys includes but not limited to; Fleet services from and to the workplace using buses that are wi-fi enabled between San Francisco and Cupertino. Also other available means of transport used to ferry workers includes shuttle which are majorly used to ferry staffs all over the company’s sprawl direct routes as well cabs in case of emergency issues (Linzmayer, 1999). The firm provides subsidized foods to its employees, free ski holidays package, and because of this social excursion it has been able to develop a social relationship with its workers. Along with this, it also offers at least 10 free days leave in a year, and sports facilities. This inspires staffs to pull towards the realization of goals and objectives. Also, due to these fringe incentives offered by the Apple to its staffs, the firm generates a social cohesion between the staffs and this is very critical for the efficiency of the organization (Linzmayer, 1999). In pursuit of their innovation strategy and top-notch excellence Apple recognizes the need to have its employees update, innovative and creative towards the changes in their respective line of duty. The firm has invested huge in provided surplus education and training of its employees for them to remain competitive and thus ensure the firm remains at the top. Employee Attributes The company recruits and employs the most brilliant employees and therefore this allows it to support empowerment and innovation and empowerment. Apple is very cautious in staffing and selection of right workers for the firm. The founders of the company always play a key role in recruitment and selection process.as a result the company has been able to come up with best employees who fit in the Apple’s culture. Employment the policies of Apple Inc. are different from other organization of firms since work experience counts for not as much of the educational training (Linzmayer, 1999). Research indicate that the firm does not employ employees who have more than two years of working experience. But further examining the policies and procedures of the firm it can be argued that experience is must for the employees apart from hypothetical knowledge, since there are many other companies where experience is required along with the theoretical knowledge. Nevertheless, the companies do not believe this and therefore it can have significant influence Apple’s in future (Lewis, 2014). Additionally, the Apple’s cultures attract creative and creative staffs and facilitate them to share and promote ideas, and as a result Company continually intensify innovation. In conclusion, Apple employs smart, creative and innovative individuals who can facilitate rapid changes in the company. It also recruits wise leaders who can lead others towards the achievement of the company’s goals (Linzmayer, 1999). Income Statement All numbers in thousands Revenue 9/24/2016 9/26/2015 Total Revenue 215,639,000 233,715,000 Cost of Revenue 131,376,000 140,089,000 Gross Profit 84,263,000 93,626,000 Research Development 10,045,000 8,067,000 Selling General and Administrative 14,194,000 14,329,000 Non Recurring - - Others - - Total Operating Expenses - - Operating Income or Loss 60,024,000 71,230,000 Total Other Income/Expenses Net 1,348,000 1,285,000 Earnings Before Interest and Taxes 61,372,000 72,515,000 Interest Expense - - Income Before Tax 61,372,000 72,515,000 Income Tax Expense 15,685,000 19,121,000 Minority Interest - - Net Income From Continuing Ops 45,687,000 53,394,000 Discontinued Operations - - Extraordinary Items - - Effect Of Accounting Changes - - Other Items - - Net Income 45,687,000 53,394,000 Preferred Stock And Other Adjustments - - Net Income Applicable To Common Shares 45,687,000 53,394,000 Balance Sheet EQUITY AND LIABILITIES FY 16 FY 15 Share Capital 55.67 55.67 Share Warrants & Outstandings Total Reserves -28.17 -28.97 Shareholder's Funds 27.50 26.70 Long-Term Borrowings 0.00 0.00 Secured Loans 0.00 0.00 Unsecured Loans 0.00 0.00 Deferred Tax Assets / Liabilities 0.00 0.00 Other Long Term Liabilities 0.00 0.00 Long Term Trade Payables 0.00 0.00 Long Term Provisions 6.90 6.90 Total Non-Current Liabilities 6.90 6.90 Current Liabilities Trade Payables 0.08 0.01 Other Current Liabilities 0.05 0.04 Short Term Borrowings 0.00 0.00 Short Term Provisions 0.93 0.96 Total Current Liabilities 1.06 1.01 Total Liabilities 35.47 34.61 ASSETS Non-Current Assets 0.00 0.00 LOANS 0.00 0.00 Gross Block 12.68 12.70 Less: Accumulated Depreciation 7.22 7.07 Less: Impairment of Assets 0.00 0.00 Net Block 5.46 5.63 Lease Adjustment A/c 0.00 0.00 Capital Work in Progress 0.00 0.00 Intangible assets under development 0.00 0.00 Pre-operative Expenses pending 0.00 0.00 Assets in transit 0.00 0.00 Non Current Investments 5.44 5.44 Long Term Loans & Advances 0.00 0.00 Other Non Current Assets 0.00 0.00 Total Non-Current Assets 10.90 11.07 Current Assets Loans & Advances Currents Investments 0.00 0.00 Inventories 2.47 2.47 Sundry Debtors 0.00 0.00 Cash and Bank 20.49 19.56 Other Current Assets 0.50 0.51 Short Term Loans and Advances 1.11 1.01 Total Current Assets 24.57 23.54 Net Current Assets (Including Current Investments) 23.50 22.53 Total Current Assets Excluding Current Investments 24.57 23.54 Miscellaneous Expenses not written off 0.00 0.00 Total Assets 35.47 34.61 Contingent Liabilities 10.00 10.00 Total Debt 0.00 0.00 Book Value (in ₹) 4.94 4.80 Adjusted Book Value (in ₹) 4.94 4.80 Financial Ratios 2007-09 2015-09 2016-09 Revenue USD Mil 182,795 233,715 Gross Margin % 38.6 40.1 Operating Income USD Mil 52,503 71,230 Operating Margin % 28.7 30.5 Net Income USD Mil 39,510 53,394 Earnings Per Share USD 6.45 9.22 Dividends USD 1.81 1.98 Payout Ratio % * 28.5 22.3 Shares Mil 6,123 5,793 Book Value Per Share * USD 20.62 22.53 Operating Cash Flow USD Mil 59,713 81,266 Cap Spending USD Mil -9,813 -11,488 Free Cash Flow USD Mil 49,900 69,778 Free Cash Flow Per Share * USD 7.73 11.82 Working Capital USD Mil 5,083 8,768 From the income statement,Apple Inc. recorded a marginal fall in the net income reported in the year 2016 compared to the financial year of 2015. Despite the marginal value of the figure, moving forward the management needs to focus on strategies that will ensure the company maintains profitability in subsequent years. The balance sheet statement indicates that the firm maintains the same value of share capital, non-current liabilities but a marginal deviation in the current liabilities over the two financial years considered. Also the firm recorded a fall in its total non-current assets for FY 2016 compared to FY 2015. The trend across all the identified financial values and ratios as shown above depicts some important issues about the firm which management needs to focus on. From the revenue generated all the way working capital for the two years considered shows marginal increases and decrease of values which is a clear indication that the firm has been operating on acceptable margin range for the majority of the financial values and ratio basis of measurement. References Dave, C., Fiona, E. C., Richard, M., & Johnston, K. (2000). Internet marketing: Strategy, implementation and practice. Harlow: Financial Times. Harms, B., & Johnson, K. (2000). U.S. Patent No. 6,070,147. Washington, DC: U.S. Patent and Trademark Office. Hertenstein, J. H., Platt, M. B., & Veryzer, R. W. (2005). The impact of industrial design effectiveness on corporate financial performance. Journal of Product Innovation Management, 22(1), 3-21. Lewis, T. G. (2014). Booms. In Book of Extremes (pp. 51-67). Springer International Publishing. Linzmayer, O. W. (1999). Apple Confidential: The Real Story of Apple Computer, Inc. No Starch Press. Nord, G. S. (2001). Annual report 2009. EVALUATING RESEARCH: CARS CREDIBILITY RATING: 3 The selection of the company to research was convincing. The author derived information from a range of sources which proves consistent from one source to another. Majority of the sources used were significantly covering the company selected. ACCURACY RATING: 2 The majority of values and projections made specifically in the financial analysis subsection were rounded off thus accuracy levels became much affected. However, points of specific years of activities like the company establishment were accurately given. REASONABLENESS RATING: 3 The remains impartial through the part coverage. Points of merits, criticism and where improvements need to be done are clearly given by the author. The author maintains consistency of information and values throughout the paper. SUPPORT RATING: 3 The author support his work with the required number of reference needed. The references used adequately relates to the company assessed. Information used in the report are significantly backed up by the sources used. Read More